Oman Crude falls by $2 from three-year high

Oman Crude (February delivery) fell by $2 to $65.26 per barrel on the Dubai Mercantile Exchange (DME) on Monday.

The decline in oil price from its three-year peak was mainly due to weak market sentiment, mainly influenced by hardening dollar against other major global currencies.

“With the dollar gaining strength, the oil importing countries have to pay more in their local currency, which is adversely affecting the demand,” said Suresh Kumar, head of research at Al Maha Financial Services. “However, it could be a temporary phenomenon.”

A phenomenal growth in US crude oil production, which touched a 47-year-high last week, also affected the market sentiment. The firm trend in oil prices has prompted oil producers to add more rigs, which resulted in a record number of rigs in the United States.

The US Energy Information Administration in January projected US production would rise to a record high annual average of 10.3 million barrels per day in 2018 and 10.9 million bpd in 2019, up from 9.3 million bpd in 2017.

Suresh Kumar said that the actual budget deficit of Oman, which is estimated at OMR3 billion, will be much lower since the oil price is

expected to rule above $60 a barrel in the coming months. This is against an assumed average oil price of $50 per barrel considered for estimating government revenue. “Till Saudi Aramco’s initial public offering gets over, the firm trend in oil price will continue.”